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London Financial Times as an interesting take on this.

http://www.ft.com/cms/s/0/ac5a582c-1846-11dd-8c92-0000779fd2ac.html

This money will be used to increase the supply of dollars offshore in Europe.

Both moves are designed to target the high spreads in the interbank money market, which have not eased in recent weeks in spite of the progress in some other credit markets.

The Fed believes that many of the strains in the dollar money markets reflect pressure from European banks that are structurally short of dollars.

Analysts said the Federal Reserve’s increase in the TAF and larger swap lines with other central banks suggest they now believe this is the best way to tackle stubbornly high interbank rates.

”After throwing everything and the kitchen sink against this financial crisis, the Fed has found what works best and is building on it,” said TJ Marta, fixed income strategist at RBC Capital Markets.

”It provides more impetus for markets to shift their focus from the financial market crisis to the real economy downturn.”